How to track daily expenses

This article was written by Bryce Bartruff, senior director and COO of American Missionary Fellowship, which offers Fiscal Fitness workshops at churches and community organizations. To learn more call him at at 610-527-4439, x104 or email him.

Tracking Out-of-Pocket Expenses

I was speaking with my friend Chris last Thursday.  He expressed frustration over his use of cash.  He said that on Monday morning he checked his wallet to make sure he had enough money to buy gas on the way to work and was surprised to find he only had $10.00.  He asked his wife if she had borrowed anything from his wallet, and she said, “No.” She never goes into his wallet, and this weekend was no exception.  The nearly “cash free” wallet (that is, free from cash) seemed odd.  He remembered going to the ATM Friday after work on Friday and withdrawing a hundred dollars, and now, he couldn’t remember where it went.  He felt cheated, almost as if someone had stolen money from him. The crucial question is, “Where did he spend his money over the weekend?”

If he does not know where his money is going, how can he manage it?

After a short discussion with his wife, Chris remembered that Friday evening he treated the family to pizza.  Saturday morning, he went to the men’s breakfast at church, which cost him $10.00, and on the way home stopped at the grocery store to purchase some milk, bread, and soda for his wife.  Later, he bought some gas for the lawnmower and fertilizer for the yard.  They also bought some coffee while at the bookstore, where he purchased a small book on hiking.

The Monday morning cashless surprise is not uncommon.  Such a dilemma can, however, be frustrating. How can we designate the right amount money for various items in our budget if we are not sure of how much we are spending, where it is spent, and who is spending it?

Use a tool to track your expenses

Fortunately, there is a simple way to determine where our money goes.  When I teach workshops, I recommend using a form to track discretionary or “out of pocket” expenses.  The left-hand column is used to write the date a purchase is made, the middle column provides space to list the item purchased, and the right-hand column shows the amount spent.  Instead of this form, you can also use a small, portable notebook with the same columns on each page. Take the form or notebook wherever you go so you can record expenses immediately after paying.

While I don’t advocate using this form for the rest of your life, recording expenses on it for three to six months will provide a realistic understanding of where your money is spent.  Annually revisiting the form for a month or so helps to refine an existing budget and the spending process.   When trying to make an accurate budget, each family member will know exactly where all the out-of-pocket money went – how much went for groceries, gas, fast food, coffee, home repairs, etc.

A side benefit of using this form is that it often helps people save money. Writing down expenses provides the opportunity to think about what you are spending, an action that alters behavior and generally reduces the amount spent by 30% or more.  Individuals interested in streamlining their expenses will find that an accountability partner who reviews all expenses is a huge asset, especially when the spender and accountability partner review the sheet together and discuss whether each expense is rational and appropriate.